SAN DIEGO (KGTV) — Monday morning, JP Morgan and Chase took over First Republic after its collapse.
First Republic started seeing problems after the collapse of Silicon Valley and Signature Bank earlier this year. Depositors worried that their bank was next in line and rushed to pull their money.
“Every bank is ready for a certain number of deposits to come out over any given time frame," said Steven Fox, founder of Next Gen Financial Planning. "If that happens much more quickly than normal, then they’re not going to be ready for it.”
First Republic reported that customers took out more than 100 billion dollars in the first quarter. That, combined with rising interest rates meant that First Republic didn't have its expected cash flow.
“The bigger underlying problem was how quickly rates rose, and the bank not being well-prepared for that," Fox said.
It’s concerning to watch another bank fall prey to inflation, but Fox says there’s nothing to worry about.
“Who do you think are the people most impacted by this?”
“None of these depositors have lost anything yet. It’s only been the shareholders and bond holders of the banks that lost anything. And I don’t see any reason that’s going to change.”
JP Morgan took on most of First Republic’s assets and deposits, so clients wont be impacted. Clients can use the same website, banking office, and ATMs as before. Right now, First Republic clients don't have access to Chase ATMs and banks, but the company says that change will come soon.
